Automotive Holdings Group's biggest shareholder, fellow car retailer AP Eagers, has laid down a challenge for its WA rival with a handsome rise in annual profit.
Shares in AP Eagers, which holds 18.6 per cent of AHG, hit a record high after the Brisbane-based group yesterday flagged a 27 per cent gain in underlying profit before tax to $78.4 million for the calendar 2012 year.
The forecast result, which beats the company's October guidance of $72 million to $75 million, compares to $61.7 million for 2011 when AP Eagers booked a $40.2 million profit after tax.
While AP Eagers chief executive Martin Ward was unavailable for comment, Australia's auto retail industry has been riding high after a record year for new vehicle sales last year.
Shares in AP Eagers are up nearly 28 per cent over the past three months, despite retreating 3Â¢ yesterday to $4.66 after hitting a record $4.71.
The positive sentiment from the AP Eagers announcement carried over into AHG, its shares jumping 11Â¢ to a 4 1/2 -year high of $3.53.
AHG, the country's biggest car retailer, recorded a 62 per cent surge in profit to $50.6 million for its last financial year to June 30. It has been tipped to better $70 million for 2012-13.
AP Eagers parachuted on to the AHG share register last July with the $120 million purchase of a 16.3 per cent stake in the WA group from the latter's founding Wheatley family.
The transaction has been a good one for both camps, with the $31.8 million of AP Eagers shares transferred to the Wheatleys as part of the deal now worth $47.5 million and AP Eagers' initial holding in AHG increasing in value by $17.5 million.